Huobi Comes Up with Explanation for Its HUSD Stablecoin Depeg

UTC by Bhushan Akolkar · 2 min read
Huobi Comes Up with Explanation for Its HUSD Stablecoin Depeg
Photo: Depositphotos

After a depeg following the removal from crypto exchange FTX, the HUSD stablecoin has regained its USD peg. The company clarifies the matter.

On Thursday, August 18, another major stablecoin depegging incident rocked the Satoshi Streets. Huobi‘s native stablecoin HUSD became the latest to lose its peg with the US Dollar. As per charts, the HUSD peg tumbled by nearly 15% on Thursday.

Hong Kong-based Stable Universal is the issuer of the HUSD stablecoin which is an ERC20 token running on the Ethereum blockchain network. The issuers calls HUSD as a safe and secure stablecoin which combines that stability of the US Dollar along with the efficiency of the blockchain technology.

Thursday’s depegging of the HUSD stablecoin resulted in the skewing of HUSD’s liquidity on the Curve 3pool (3Crv). The decentralized exchange was quick to issue a warning that the stablecoin rate was too low. As of Thursday, the HUSD price had dipped to $0.87.

Yesterday’s development came as popular crypto exchange FTX removed HUSD from its basket of USD-pegged stablecoins. The official announcement from the exchange read:

HUSD will no longer be treated as part of the USD basket. Users will be able to deposit and withdraw HUSD if they wish; doing so will interact with distinct HUSD balances, not USD balances. HUSD deposits will not count towards USD balances and will not serve as collateral.

Interestingly, FTX also stated that it is aware of token’s liquidity issues. On its Twitter handle, FTX wrote: “Huobi has always prioritized the safety of our customers’ assets, and will work together with HUSD’s issuer to find a solution and restore its stability as soon as possible”.

Huobi issues the HUSD stablecoin back in 2019 by partnering with Stable Universal and Paxos Trust Company.

HUSD Regains Its Dollar Peg after Clarification

The HUSD stablecoin has almost completely regained its USD peg and is currently trading at $0.99. The company issued a statement that they have recently closed several accounts which resulted in short-term liquidity problem. The announcement reads:

“Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts. Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved”.

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